During a virtual chat organized by “EFI WEEK Online”, Dal Poggetto, Kiguel and Artana discussed everything. Forecasts for all tastes
While the pandemic and the economic crisis continue to plague Argentina, and this 2020 seems like a lost year that will cost a lot to lift, economists believe that much of the future recovery will depend on the government’s abilities to clear up pockets of uncertainty. Debt, a growing fiscal deficit, monetary expansion, and the currency gap are on the priority list.
In a virtual conference held at the “EFI WEEK Online” -expo EXPO EFI- economists Marina Dal Poggetto, director of EcoGo, Miguel Kiguel, director of Econviews and Daniel Artana, FIEL’s chief economist, were lapidary regarding the collapse of the level of activity this year.
In addition, they were concerned about what the recovery will be like. Dal Poggetto had the first turn, maintaining that “the dynamics of pandemic he wore us all. ” Although it affirms that the economy will fall 10% this year, there are stress scenarios – where due to the extension of quarantine the third quarter of the year is equal to the second – that could lead to the fall in GDP to 13%.
EcoGo’s executive director believes the economy could drop as much as 13 percent this year.
Difficult scenarios ahead
Thus, the drag for next year would go from 3.3 to 1.5%, notoriously hindering a rebound more or less sitting on the street. “What will be Argentina’s ability to rebound? The rebound is going to be, the forward trend is what is not known“said the director of EcoGo.
An important part of the concerns has to do with the fiscal hole. “If the quarantine is extended, spending and the fiscal hole will widen further,” said Dal Poggetto. The deficit, according to their calculations, would be around 6.5% and 8.5% projected according to the extent of the economic parate.
“The fundamentals are better than in other crises, if the debt is solved it decompresses the short-term maturities. There is scope to align the fundamentals but it depends on the definitions of economic policy. The ability to stabilize the macro is going to be fundamental to see post-pandemic recovery. Debt, fiscal path and how the government acts in the face of the crisis generate uncertainty, “he said.
Kiguel, director of Econviews. He admitted that the Government is “facing unprecedented challenges, under a complex situation for Argentina.” “The pandemic was a wet rained envelope, forced us to see a very strong drop in the Product after 10 years of stagnation. We have in GDP of the year 2000”, Kiguel exemplified.
The scenario of the “V” will depend on the duration of the quarantine that will have an impact and what happens in the world. “There is a good chance that it will recover quickly but we have a third element that is debt and the government’s signals. If we continue to postpone an agreement with creditors, the recovery in V has less chance of happening,” said the director of Econviews.
Regarding the fiscal issue, Kiguel said it was inevitable, but the big issue is how it is financed. He calculated that for each month of quarantine the deficit increases by 1 percentage point. And that this is being financed with the assistance of the BCR to the Treasury, which reached 1 trillion pesos.
Kiguel believes that it is inevitable that monetary expansion will end in more inflation.
They’ll burn the weights in my hand
Of that total that Miguel Pesce issued, there were 223,000 million pesos as the rest was sterilized via Leliqs. Anyway, Kiguel remarks that the important thing is the amount of M2 money that was left, something that will generate inflation in the future. That monetary aggregate grew 100% in 12 months.
“This indicates that people have more pesos than they want, that is, they have excess pesos. That money is not going to inflation now but if it is not removed we have a significant inflationary risk. It is difficult that at some point inflation will not jump but it is a matter of timing, “said Kiguel.
Finally, the conference Artana de FAITHFUL. The economist indicated that the Government would have to be clearing scenarios, such as the debt. Both he and Kiguel agreed that the first thing is to fix the debt – which is not so far between the parties – to direct the rest.
Artana warned about the tax issue and said that something temporary can be permanent and create a nightmare.
Artana is concerned about the fiscal deficit and increased spending. “A transitory situation that can be permanent and turn into a nightmare,” he said..
On the other hand, the FIEL economist pointed out that the country does not have an economic program and the Government seeks to buy credibility through an agreement with the International Monetary Fund. “After being credible, we will see what the economic program is that we do not yet know. Today we cannot say whether it closes or not because there is no economic program,” he argued.
“Many times governments have to speak for the rostrum but decisions have to be consistent with those who save and invest. Credibility gives us room to solve complex problems. But it seems that the government is going in the opposite direction to take advantage of this crisis. We need the government to be competent, there is no room for error. Let’s hope they get it right this time, “said Artana.
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